At the Crossroads of Media, Culture and Technology

Long Tail, Tall Tale?

Posted by Hanson Hosein:

The Wall Street Journal reports on a Harvard Business School study refuting Chris Andersen’s “Long Tail” theory.  I’ve pasted the Executive Summary from the report below the break.  It may be that ultimately, as we’ve discussed in our program, given infinite choice, consumers/users ultimately want a filter.  And blockbusters might provide that easy filter.

That said, there’s no doubt the Internet has drastically reduced distribution and inventory costs, which makes it much easier to purchase those “misses.”  My film, Independent America, is one such niche item that has benefited from this trend.  It’s not a blockbuster, it doesn’t have the support of a major distribution house, but I’m still able to leverage inexpensive online resources to get it out to those who want to acquire it.

EXECUTIVE SUMMARY: Should You Invest in the Long Tail? By Anita Elberse

The blockbuster strategy is a time-honored approach, particularly in media and entertainment. When space is limited on store shelves and in traditional distribution channels, producers tend to focus on a few likely best sellers, hoping that one or two big hits will carry the rest of their lists. But online retailing and the digitization of information goods have changed the commercial landscape: Virtual shelf space is infinite, consumers can search through innumerable options, and the marginal cost of reproducing and distributing products is low. What does that mean for the blockbuster strategy?

In his 2006 book, The Long Tail: Why the Future of Business Is Selling Less of More, Chris Anderson, editor of Wired magazine, argues that the sudden availability of niche offerings more closely tailored to their tastes will lure consumers away from homogenized hits. The “tail” of the sales distribution curve, he says, will become longer, fatter, and more profitable.

Elberse, a professor at Harvard Business School, set out to investigate whether Anderson’s long-tail theory is actually playing out in today’s markets. She focused on the music and home-video industries—two markets that Anderson and others frequently hold up as examples of the long tail in action—reviewing sales data from Nielsen SoundScan, Nielsen VideoScan, the online music service Rhapsody, and the Australian DVD-by-mail service Quickflix. What she found may surprise you: Blockbusters are capturing even more of the market than they used to, and consumers in the tail don’t really like niche products much. Elberse outlines the implications of her research for producers and retailers, and offers strategic advice to both groups.

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One Response to Long Tail, Tall Tale?

  1. kegill says:

    Chris has written a response, which notes that “there is a subtle difference in the way we define the Long Tail, especially in the definitions of “head” and “tail”, that leads to very different results… So in the data she cites, the head of the online music market represents 32% of the all plays, and the tail represents 68%. That’s certainly no challenge to the Long Tail theory; indeed, it’s even more tail-heavy than the data I cited in my book (probably because I used a more generous estimate of 50,000 tracks for Wal-Mart’s inventory).”

    Three commenters note that the HBR article is based on “(1) percentages rather than on absolute numbers … (2) looking at percentages misses the entire point of what the long tail is about … (3) percentages aren’t neccesarily the best way to approach the problem in markets where production and distribution costs are approaching nil.”

    Chris Skinner (in comments) also disagrees and points to The Long Tail of Banking.

    One suggests that the problem identified by the data is that good filters — ie, recommendation engines — are essential in a world without scarcity.

    And another suggests that consumers — at least American ones — have demonstrated historical preference for “more products” even if they buy from the “head.” Example: supermarket putting neighborhood grocery store out of business; suburban mega-store putting supermarket out of business.

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